Vodafone grows faster than Airtel, reports first profit

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Vodafone, India’s second largest GSM player, saw faster revenue growth in the financial year ended on March 31 at 13 per cent compared with 8 per cent for Airtel, the market leader.

The British telecom major on Tuesday reported Rs 37,606 crore India revenue for the year, with earnings before interest, tax, depreciation and amortisation (Ebitda) growing to Rs 13,398 crore from Rs 10,640 crore a year ago.

Vodafone’s India operation was in losses since its entry into the country in 2007, though the company never quantified it. This is the first time the company has reported a net profit.

The Vodafone group last month bought out the minority shareholders to turn its India operations into a 100 per cent subsidiary.

The company bettered Airtel on other parameters too: revenue per minute grew to Rs 0.47 against Airtel’s Rs 0.44 while Arpu, or average revenue per user, stood at Rs 199 against its biggest rival’s Rs 196.

Vodafone India man­ag­ing director and CEO Mar­t­en Pieters said maintaining focus on profitable growth led to significant improvement in operating margins and strong cash flows.

“With the nationwide rollout of M-Pesa (mobile wallet), our thrust on leveraging mobile technology to drive financial inclusion has also gathered momentum.”

Chief financial officer Thomas Reisten said higher data revenue, price-hardening measures, scale benefits and significant focus on cost efficiencies drove margin improvement in the year gone by.

Bharti Airtel last month reported 8 per cent revenue growth for financial year 2013-14 at Rs 46,683 crore. The company had a 28.42 per cent share of the GSM market with a subscriber base of 20.65 crore while Vodafone held 23 per cent market share with 16.66 crore customers

Reisten said Vodafone focused on improving operational efficiencies. The company’s operating free cash flow stood at Rs 8,466 crore against Rs 6,294 crore in FY13. It spent about Rs 700 crore as capital expenditure, up 48.2 per cent on year, and made significant investment on new cell sites and for enhancement of customer experience.

Pieters said mobile tariffs needed to go up as input costs were rising. He said Vodafone’s revenue per minute was among the highest in the country, but it would be difficult to increase prices because some of the smaller players that offer very low prices are hesitant to increase rates.

CEO Marten Pieters said the integration of Cable & Wireless with Vodafone Busienss Services (enterprise business) enriched its portfolio as a total telecom solutions provider for corporate and enterprise customers. “We will continue to further accelerate investments in all these areas for future growth and to deliver superior customer experience. This is in line with our aspiration to be the most trusted, respected and successful telecommunication company in India,” he said.


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